Earnings Call Q1 2021 - Mutares
Transcript of Earnings Call Q1 2021 - Mutares
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Earnings CallQ1 2021
Munich, 11 May 2021
Disclaimer
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This document has been prepared by Mutares SE & Co. KGaA solely for the use in thispresentation.The information contained in this document has not been independently verified. No representation or warranty - whether expressed or implied – is made as to, and noreliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained therein. Neither the company nor any of itsaffiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss arising from any use of this document or its content orotherwise arising in connection with this document.This document does not constitute an offer or invitation to purchase or subscribe for any shares and neither this document nor any part of it shall form the basis of, or berelied upon in connection with, any contract or commitment whatsoever.This document contains forward-looking statements that are based on current estimates and assumptions made by the management of Mutares SE & Co. KGaA, andother information currently available to them. The words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similarexpressions are used to identify forward-looking statements. Various known and unknown risks, uncertainties and other factors could cause actual results to differmaterially from those contained in the forward-looking statements. Mutares SE & Co. KGaA does not intend or assume any obligation to update any forward-lookingstatements. Any forward-looking statement speaks only as of the date on which it is made and is based on numerous assumptions which may or may not prove to becorrect.This presentation and its contents are confidential and are not for release, reproduction, publication or distribution, in whole or in part, directly or indirectly, in or into or fromthe United States of America, Canada, Australia, Japan or any jurisdiction where such distribution is unlawful. This presentation is not an offer or invitation to buy or sellsecurities in any jurisdiction.By accepting this document, you agree with the foregoing.
Speakers Today
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Management Board
Johannes LaumannCIO
Mark FriedrichCFO
Business Model
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Development2
Financials3
Outlook 4
Agenda
1 Business Model
Who we are and what we do
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Turnaround Investor
Our Valueswhat we stand for
EntrepreneurshipIntegrative Management
SustainabilityPersonal Integrity
Our Visionwhat we strive for
to be „First in mind – firstin Choice“ in Private Equity Turnaround.
Our Missionwhat we do
Creating value by transforming risks into opportunities and successes.
Our Goalswhat we want to achieve
Creating maximum value for our shareholders through
sustainably profitable businesses.
1 Business Model
Footprint
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European focus with an international footprint
24*Portfolio companieswith HQ in Europe
> 12.000employeesworldwide
8Mutares Offices
in Europe
*) incl. signed transactions
1 Business Model
Company Goals
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Our aim is to become the leading European Private Equity Turnaround Investor
6 C o m p a n y G o a l s
Group revenues by2023
EUR 100mHolding revenuesby 2023
EUR >60mHolding profit by2023
7-10x ROICAcross all cycles
EUR 1.00Basis dividend plus performancedividend
SustainabilityIntegration of ESG factors
EUR 3.0bn
1 Business Model
Growth as Investment Focus
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Criteria for sustainable Value Creation
European Focus Three Segments Company sizeEUR 100-500m
Turnaround Hero
2019
EUR 2.2bn
2023e2020 2021e 2022e
EUR 1.6bnEUR 1.0bn
EUR 2.6bnEUR 3.0bn
Revenue DevelopmentMutares Group
1 Business Model
Value Creation Phases
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Our success is based on four main sources of income
Exit Realization
04Harvesting
01Acquisition.
02Realignment
Consulting Income 03
Optimization
Portfolio Dividends
1 x ROIC 7-10 x ROIC
Deal Closure
The Management and Supervisory Board hold >40% of the shares and are thus significantly involved in the value creation of Mutares.
1 Business Model
Successful Trackrecord with high return
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Continuous increase in returns over the past 10 years
ROIC 5,6
ROIC >10
20202008
+ 21 Acquisitions
7 Exits
+ EUR 1.9bn sales
+ 202% Market Cap.ROIC 2,2
Above-average success in thelast 24 months*
*) Assessment period: April 2019 until April 2021
1 Business Model
Integration of ESG criteria
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ESG creates sustainable value and mitigates risks, also for shareholders
Environmental
Social
Governance
⌐ Mutares takes measures to offset its CO2 footprint ⌐ More than 60% of the portfolio companies are certified according to ISO 14001:2015⌐ Energy efficiency programs through new product lines ⌐ Further environmental certifications of many portfolio companies such as the FSC seal
⌐ Implementation of a zero-accident safety culture⌐ Diversity in terms of nationality, age and gender ⌐ Regular donations and commitment within the region by Mutares and portfolio
companies (e.g. Kinderhospitz München e.V.)
⌐ Established compliance system, initiated with a code of conduct that focuses on all relevant areas (antitrust law, anti-corruption, capital market compliance, environmental protection and data protection, ...)
⌐ Employee policy management tool⌐ Whistleblower protection through anonymous email service available to all employees
(promotes transparency)
Since 2021 Mutares has been committed to the UN Global Compact corporate responsibility initiative and its principles in the areas of human rights, labour, the environment and anti-corruption.
Business Model
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1
Development2
Financials3
Outlook 4
Agenda
2 Development
Mutares Share
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+52%since beginning of 2021
strong growth
EUR 28.00latest analysts‘ price
expectations*
Sustainable value creation for our Shareholders
EUR 1.00Dividend per share in the
last three years
*) M.M.Warburg Research as of 12 April 2021
10,00
12,00
14,00
16,00
18,00
20,00
22,00
24,00
26,00
Jan Feb Mrz Apr
Mutares share in €
Mar
26.00
24.00
22.00
20.00
18.00
16.00
14.00
12.00
10.00
EUR 24.0530 April 2021
2 Development
Mutares Bond
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75%
80%
85%
90%
95%
100%
105%
110%
Apr Mai Jun Jul Aug Sep Okt Nov Dez Jan Feb Mrz Apr
Mutares bond development 2020/2021
+37%since March 2020
strong growth
EUR 10.0madditional tap issue in Feb. 21
EUR 80.0mtotal issue amount
103 %30 April 2021
May Oct Dec Mar
Sustainable value creation for our Bond Investors
2 Development
Highlights of Q1 2021
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High transaction activity on buy- and sell-side
ClosedAcquisitions (EXI,
Clecim)
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Closed Exits withROIC > 10
(Nexive, Balcke-Dürr Rothemühle)
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Signing of the UN Global Compact
SPA for STS Exit signed
Additional tap issue for bond
EUR 10.0m
UpgradedCompanys fromRealignment to
Optimization
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SignedAcquisitions (La
Rochette)
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Development
Nexive case study: Mutares‘ fastest exit
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Company Profile¬ Nexive provides postal services to Italian households and parcel services to
the entire Italian market. The company is the second largest Italian mail andparcel delivery company, with 1,440 employees and over 2,000 outletsthroughout Italy
¬ Nexive generated approx. EUR 230 million in revenues in 2019 and was80% acquired by Mutares from PostNL in July 2020
Platform investment in the Goods & Services segment: Innovative postal service offerings for Italy
Turnaround¬ Nexive was severely impacted by the very difficult economic environment in
the first half of 2020¬ In just seven months, Mutares initiated numerous measures for a successful
turnaround¬ Mutares, together with the local management, focused on the consolidation
of the core business and growth in the mail as well as in the parcel businesswith acknowledgement by the recipient as part of the restructuring plan
¬ After the initial negative impact of COVID-19, Nexive has been on a strongcyclical recovery path since the acquisition by Mutares
Exit¬ Poste Italiane, the Italian market leader, took advantage of a limited window
in Italian legislation. This legislation allows Poste Italiane to push ahead withits acquisition and consolidation plans for the Italian postal and parcelservices market under certain conditions
¬ Mutares sold Nexive to Poste Italiane at a double-digit return. Thetransaction was closed in January 2021, making Nexive the fastest exit inMutares' history.
Serv
ices
Postal services Print & Digital Package Control & Notification
Rev
enue
bre
akdo
wn
Postal services
PackageControl & Notification
14%
72%
Print7%
By product By country
100%Italy
6%
2
ROIC >10
Business Model
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1
Development2
Financials3
Outlook 4
Agenda
3 Financials
Key financial data of Q1 2021
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High transaction activity is driving key financials
Mutares Group Mutares Holding
Q1 2020 Q1 2020
31 Dec. 2020
EUR 39.0m EUR -10.4m
EUR 145.3m
Q1 2020
EUR 315.7m
31 Dec. 2020
16%
Revenue
EUR 493.8mEBITDA
EUR 53.8mAdjusted EBITDA
EUR 0.3m
Cash & equivalents
EUR 180.3mEquity Ratio
18%
Consulting Revenues
EUR 10.9m
Consultants
# 85
EUR 7.2mQ1 2020
# 7031 Dec. 2020
3 Financials
Segment Financials (1/3)
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Automotive & Mobility
Comments
mEUR Q1 2021 Q1 2020
Revenues 187.0 124.8
Cost of material -112.1 -76.3
Personnel expenses -59.4 -38.4
Other expenses -26.3 -19.0
EBITDA -1.6 34.8
Adjusted EBITDA 4.1 -3.3
in % of Revenues 2.2% -2.6%
Revenue Bridge
¬ Revenues in FY 2020 hugely impacted by COVID-19, since Q3 2020 strong recovery and organic growth in Q1 2021 vs Q1 2020
¬ New platforms SFC Solutions and iinovisalso driving revenue growth
¬ EBITDA in Q1 2020 benefits from bargain purchases
¬ Optimization successes at STS Group and KICO Group significantly improve Adjusted EBITDA together with positive contribution from SFC/Elastomer/Plati Group
3 Financials
Segment Financials (2/3)
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Engineering & Technology
mEUR Q1 2021 Q1 2020
Revenues 177.3 105.9
Cost of material -117.3 -71.1
Personnel expenses -40.1 -29.0
Other expenses -22.1 -12.5
EBITDA 38.5 2.0
Adjusted EBITDA -1.0 -4.2
in % of Revenues -0.6% -4.0%
Comments
Revenue Bridge
¬ Increase in revenues mainly driven by the new platform and add-on acquisitions
¬ EBITDA benefits from the gains from bargain purchase from the acquisition of Clecim and the gain from the Balcke-Dürr Rothemühle exit
¬ Despite a negative market environment at EUPEC and Gemini Rail Group and the still negative earnings contributions from Royal De Boer and Japy Tech, Adjusted EBITDA improved
¬ Encouraging progress in the development of the Donges Group and an already positive contribution from Lacroix + Kress
3 Financials
Segment Financials (3/3)
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Goods & Services
mEUR Q1 2021 Q1 2020
Revenues 129.4 84.9
Cost of material -86.9 -51.2
Personnel expenses -26.6 -16.4
Other expenses -24.0 -18.6
EBITDA 16.7 2.6
Adjusted EBITDA -3.0 -2.6
in % of Revenues -2.3% -3.0%
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Comments
Revenue Bridge
¬ Substantial increase in revenues due to the new acquisition of Terranor Group and SABO
¬ Successful exit of Nexive and the transaction-related income from the acquisition of EXI drive EBITDA
¬ Adjusted EBITDA was burdened by the significantly negative contribution from Nexive prior to the exit; development at BEXity and the new platform investments Terranor Group and SABO very pleasing
3 Financials
Lifecycle Financials
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Diversified portfolio along the life cycle
Opt
imiz
atio
nR
ealig
nmen
tH
arve
stin
g
100 1 2 3 6Maturity (actual holding period – years)
Q1 2021
SPA for Exit signed
Comments
¬ Adjusted EBITDA differs significantly along the three lifecycle stages: Realignment Optimization Harvesting
¬ Revised allocation of portfolio companies in Q1 2021 depending of the actual development status in the value creation
¬ Positive operational performance reflected by upward move especially at BEXity and KICO Group, quick restructuring successes at TerranorGroup, Lacroix + Kress and SABO
¬ Development at EUPEC and TréfilUnionbehind expectations; Gemini Rail Group with add-on acquisition of ADCommsmoved into optimization phase
Upgraded Downgraded
234.6
10.7
598.8
43.9
-11.7
166.5
215.2
1.1
519.9
Revenues Total AssetsAdjusted EBITDA
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Business Model
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1
Development2
Financials3
Outlook 4
Agenda
4 Outlook
Achievements beyond Q1 2021
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ClosedAcquistions(La Rochette,
Carglass Maison)
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SignedAcquistions(ADComms)
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Additional performance
dividendproposed for
FY2020
EUR 1.50total dividend
Closing of Lapeyreexpected in Q2 2021
+ EUR 610m in revenues
4 Outlook
We will continue our path for sustainable growth…
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…and to increase the attractiveness of the Mutares share for investors
Our Visionwhat we strive for
To be the market leading Private Equity Turnaround Investor.
„First in mind – first in Choice“
Sustained attractivedividend capability
Profitable, strong and sustainable growth
also for 2021
Revenues expected forFY2021
EUR > 2.2bn
Increased attractive opportunities on the M&A side due to the COVID-19 situation.
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Q&A Thank you for your questions.
If you want to ask a questionplease dial in from your phone:DE: +49 69 2017 44220 UK: +44 203 0092470US: +1 877 4230830CH: +41 445 806522
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27McKinsey & Company
Back-up
Consolidated Statement of Profit and Loss
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mEUR Q1 2021 Q1 2020
Revenues 493.8 315.7
+/- Change in inventories 6.2 -2.5
Other income 68.2 58.6
Cost of material -316.3 -199.0
Personnel expenses -133.6 -88.4
Other expenses -64.5 -45.4
EBITDA 53.8 39.0
Adjusted EBITDA 0.3 -10.4
Depreciation & Amortisation -23.6 -18.2
EBIT 30.2 20.7
Financial result -5.2 -4.8
Income taxes -1.4 -0.3
Net income 23.6 15.7
Comments
¬ Revenue growth mainly attributable to high transaction activity in FY 2020
¬ Gains from bargain purchases and exits are recorded within other income
¬ Increase of cost of material, personnel expenses and other expenses in connection with higher revenues
¬ Adjusted EBITDA improved significantly thanks to the partly very positive development in the portfolio companies
¬ Depreciation & amortisation includes those for leases according to IFRS
¬ Increased financial expenses linked to the bond
Back-up
Consolidated Adjusted EBITDA
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mEUR Q1 2021 Q1 2020
EBITDA 53.8 39.0
Income from bargain purchases -36.9 -53.6
Restructuring and other non-recurring expenses 7.9 4.1
Deconsolidation effects -24.5 0.0
Adjusted EBITDA 0.3 -10.5
Comments
¬ Reported EBITDA highly influenced by extraordinary effects related to transactions, restructuring and other one-off expenses; Adjusted EBITDA adjusted for these one-off effects
¬ Effects from COVID-19 are not eliminated and thus negatively impact Adjusted EBITDA
¬ Three categories of adjustments: Transaction related income from
bargain purchases results from the acquisitions
Restructuring and other non-recurring expenses mainly in connection with measures on personnel reduction
Successful exits led to a significant positive effect on EBITDA
Back-up
Consolidated Balance Sheet
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ü
mEUR 31/03/2021 31/12/2020 mEUR 31/03/2021 31/12/2020
Intangible assets 74.8 76.0 Total equity 235.6 207.2
PP&E 249.4 242.6 Financial liabilities 240.1 231.3
Right of use assets 142.7 147.4 Provisions 160.9 156.5
Other 30.9 32.3 Other 22.1 17.5
Non-current assets 497.9 498.3 Non-current liab. 423.1 405.4
Inventories 227.6 203.5 Trade payables 259.4 250.0
Trade & other rec. 282.5 256.6 Other financial liab. 152.8 143.1
Cash & equivalents 180.3 145.3 Provisions 58.1 50.2
Other 131.9 223.5 Other 191.3 271.3
Current assets 822.4 828.9 Current liabilities 661.6 714.6
Total assets 1,320.2 1,327.2 Total equity & liab. 1,320.2 1,327.2